Private sector not accepting Govt business – Williams
There is increasing reluctance among the private sector to accept Government business or take on any more of its debt, according a senior business executive.
Managing Director of Light & Power Holdings Limited Peter Williams said rising uncertainty about the true state of the economy had led to significant erosion of confidence.
In addition, he said local business people were worried they could be left with the short end of the stick if they did business with Government.
“You are very much more reluctant now to take on anything that says Government,” Williams said today at the 2017 First Citizens Investment Services market outlook at the Barbados Hilton Resort.
“So we avoid allowing Government to rack up that debt by not providing services. We don’t lend to Government, we don’t take out investment whether instruments in terms of treasury bonds or whatever Government [paper], so our confidence is gone. When it comes to the foreign investment then we are very careful about how we are going to bring in money because you are not certain you are going to be able to get it back, not even necessarily in a lump sum but in terms of dividend payments.”
Williams, a former president of the Barbados Association of Professional Engineers, observed that the recent Estimates did not include critical information about Government arrears to private individuals and businesses, or Government’s borrowing from the National Insurance Scheme.
He also suggested the 10.3 weeks of international reserves cover could be further impacted by the “pipeline” of payments to be made in investments outside Barbados by residents here.
Meantime, local real estate mogul Sir Paul Altman said there was a growing level of uncertainty among overseas investors who are prepared to provide a “tsunami” of investment but are being hindered due to “inefficiencies” in the economy.
Sir Paul said the fact that there was in excess of US$2 billion worth of real estate listed on the West Coast for some time now, it was a reflection of not only the declining value in the pound, but also the level of confidence among investors, as well as the inefficiencies in the Barbados economy.
Stating that confidence “doesn’t exist” at this time, Sir Paul said uncertainties and inefficiencies remained two of the island’s biggest bugbears when it came to its ability to attract investment.
“I use those two words and could underline them or put them in red- lack of efficiency and lack of confidence. Yes, you can say some of that, certainly from a confidence point of view uncertainty is global, but certainly from an efficiency point of view that is very much our market. People coming here to invest, they expect a certain reception in terms of what their expectations are, in terms of how they are going to be greeted, how they are going to be handled,” Sir Paul explained.
The developer cautioned that the island would continue to lose out on investments unless equal attention was paid to tackling the country’s inefficiencies and the fiscal deficit and debt situation.
“It is certainly seen as a place where people want to own homes and second homes. I always feel that if we were to correct that problem of efficiency and confidence in the market there is a possibly a tsunami waiting on the outside, willing, ready and able to come in here to propel this economy to where we need it to be and to where we know that it can be
At the same time Sir Paul admitted that “the reality has set in” that properties were over priced in Barbados for years.
“I think the reality has set in where properties now are selling at [what] they are describing at discounted rates,” he said.